Author Topic: Case Study-Am I Crazy!  (Read 14770 times)

mtnbikes

  • 5 O'Clock Shadow
  • *
  • Posts: 28
Case Study-Am I Crazy!
« on: March 24, 2015, 09:25:02 AM »
Hello Everyone,

Brief introduction: My wife (DW) and I (DH) would like to make a change in three years in order to spend more quality time with family, simplify our life, enjoy our hobbies more often, and escape the climate here in Minnesota. We also have three children ages 8, 6, and 2. We are leaning towards Colorado since I used to live there and find the climate conducive to our desired lifestyle. In addition, we have friends living there that could help us with the process of relocating. Our goal is for DW to retire in three years and I would work full time in my current profession.

Any financial advice is welcomed. I know there are areas we need to improve on and we are working on those, so please not too many punches in the face. Thank you!

Professions:
DH(44): A part time (0.8) RN at a major hospital.
DW(42): A full time police sergeant in a major city.

Income & Benefits (monthly)
Combined gross income: $11,500 (will increase, 2 raises in June)
Combined net income: $8500
The difference is from health ins, deferred comp, pension, and taxes.

Assets
House      $305,000
Vehicle 1      $28,000
Vehicle 2      $9,000
RV         $22,000
Savings      $9000
MNDCP(Fidelity)   $127,000
WROS (Fidelity)   $88,000
SEP(Fidelity)   $33,400
Roth(Fidelity)   $3,600
tIRA(Fidelity)   $5,600
403b(Fidelity)   $515

Liabilities
House      $179,700 (3.62% refi last fall to 15 yr loan)
RV         $23,000 (5.25%)
Student Loan   $52,000 (4.25%)
Line of Credit   $20,000 (7%) Just finished basement project
Credit Card   $13,000 (0%) Just finished basement project

Budgeted Expenses (monthly)
Cash         $50
Clothing      $80
Dry Cleaning   $20
Food         $800
Housing      $150
Medical      $40
Personal      $120
Recreation      $100
Transportation   $625
Utilities      $355
Liabilities      $2,688
TOTAL      $5,028   

*All extra cash per month goes to debt snowball. We are on schedule to have all debt, except mortgage, to be paid off in less than three years.

Future Pensions
DW: $4,000-$4,500 monthly
DH: $1,200-1,500 monthly


« Last Edit: March 24, 2015, 09:48:02 AM by mtnbikes »

britton

  • 5 O'Clock Shadow
  • *
  • Posts: 7
Re: Case Study-Am I Crazy!
« Reply #1 on: March 24, 2015, 09:53:17 AM »
The RV is the first thing that just jumps out at me. It looks like you are underwater on it (valued at 22K but 23K loan?). If you sold this off, you could cover you whole LOC in one stroke. My first question would be why do you need an RV? You already have 2 cars plus purchasing a couple of tents should more than make up for the missing RV.

FrugalSpendthrift

  • Stubble
  • **
  • Posts: 210
Re: Case Study-Am I Crazy!
« Reply #2 on: March 24, 2015, 10:04:26 AM »
Was 'Am I crazy!' the only question?

How much will your monthly spending drop after three years, when you knock out most of the debt?  How much income will you lose when DW stops working?

Was the basement project worth $33k?

How frequently is the RV used?  How much would it cost to rent one occasionally?

It doesn't look like you are taking full advantage of the retirement accounts.  Any chance to save on taxes is worth considering.

neo von retorch

  • Magnum Stache
  • ******
  • Posts: 3358
  • Location: SE PA
    • Fi@retorch - personal finance tracking
Re: Case Study-Am I Crazy!
« Reply #3 on: March 24, 2015, 10:10:17 AM »
What are all these categories?

Cash         $50
Clothing      $80
Dry Cleaning   $20
Personal      $120
Recreation      $100

Maybe "Dry Cleaning" is required by employment. But $350 in ambiguous flexible categories? And $800 in food? Overall there's probably at least a little room to cut down on these. And I only say that because you do have debt (aka YOUR HAIR IS ON FIRE to the tune of $56,000!!) so you should really limit spending and make use of the all the fun things you have around (aka 3 kids and an amazing basement!)

mtnbikes

  • 5 O'Clock Shadow
  • *
  • Posts: 28
Re: Case Study-Am I Crazy!
« Reply #4 on: March 24, 2015, 10:16:52 AM »
Briton: Yes...we have considered selling the RV and ironically we have all the camping gear you suggested. Once we had kids it made it a lot easier to camp with an RV in all types of weather.

Frugalspendthrift:To answer your questions
1. Yes...there are multiple questions tied up in my case study. That's why I'm looking to everyone for advice.
2. Monthly spending should be reduced at least 50% once debt is gone, minus the mortgage. We will loose close to $90,000 gross per year when DW retires.
3. The basement needed to be finished to accommodate five of us. It will enable us to sell the house at a higher profit in 3 years.
4. The RV is used frequently...enough where I can write the interest off as a deduction.
5. Yes...we need to invest more in retirement accounts.

ShoulderThingThatGoesUp

  • Magnum Stache
  • ******
  • Posts: 3057
  • Location: Emmaus, PA
Re: Case Study-Am I Crazy!
« Reply #5 on: March 24, 2015, 10:21:44 AM »
What's the math in your area on selling the house now, just renovated, and renting until you move? Gives you more flexibility on the move.

UnleashHell

  • Walrus Stache
  • *******
  • Posts: 6543
  • Age: 52
  • Location: Florida
  • Chapter IV - A New ... er.. something
Re: Case Study-Am I Crazy!
« Reply #6 on: March 24, 2015, 10:24:49 AM »
What's the math in your area on selling the house now, just renovated, and renting until you move? Gives you more flexibility on the move.

If you aren;t getting rid of the RV then sell the house and live in that!!

charis

  • Handlebar Stache
  • *****
  • Posts: 1738
Re: Case Study-Am I Crazy!
« Reply #7 on: March 24, 2015, 10:29:26 AM »
Where do you live that you can even break even on a 33K basement renovation when you sell?  I don't buy this at all.  But it's done, so there is not much you can do about it now.

You may use the RV frequently, but you can't afford it with the debt you have.   Unless you live in it for a little while after you sell your house and find something less expensive.


MayDay

  • Magnum Stache
  • ******
  • Posts: 4015
Re: Case Study-Am I Crazy!
« Reply #8 on: March 24, 2015, 10:31:21 AM »
It is not reasonable to live in an RV in Mpls in the winter. 

Sounds like you'll be able to live off your wife's pension.  When does that start?  I know an Edina fire medic who gets his at age 50.  Most of those guys quite at 50, take the pension, and work a side job for fun and end up making way more overall. 

grundomatic

  • 5 O'Clock Shadow
  • *
  • Posts: 49
Re: Case Study-Am I Crazy!
« Reply #9 on: March 24, 2015, 10:37:07 AM »
While I am new to the MMM lifestyle and the forum itself, I will share what I see:

RV: Do you have time right now for long RV trips? Can you rent an RV for the few trips you take before you move? Seems like this could be a depreciating asset, and the interest is working against you. You can always buy another one after your lifestyle change.

Cars: $28k car? First off, you didn't list a car loan, so good job there. I would sell this, buy something reasonable but reliable, and put the difference towards the line of credit. From my (new) perspective, $28k is half of a condo--not 1 automobile. This should also reduce your monthly transportation expense--which I assume includes a pretty pricey insurance premium on that car.

Savings: Since you clearly have credit cards and a line of credit, I would put this towards the two remaining debts--that represents a 4.25% return on this money. If some "emergency" pops up, you put it on the card, then pay it right off the next time you get paid.

If you make these changes, you can have your debt paid off in less than 2 years. These should be super easy changes that don't really affect your lifestyle.  Other than that, keep reading the blog. Read every post since the beginning of time. By the time you are done, you may be in the position to sell your house, make the move, and be comfortable buying slightly less house that you can get almost entirely for the equity in your current house. At that point think of how far just your one paycheck will go (no debt, not even a mortgage), and soon you can join your family in retirement, or just scale back the job immediately (police reserves?) so you can enjoy your kids growing up.





mtnbikes

  • 5 O'Clock Shadow
  • *
  • Posts: 28
Re: Case Study-Am I Crazy!
« Reply #10 on: March 24, 2015, 11:12:07 AM »
Where do you live that you can even break even on a 33K basement renovation when you sell?  I don't buy this at all.  But it's done, so there is not much you can do about it now.

You may use the RV frequently, but you can't afford it with the debt you have.   Unless you live in it for a little while after you sell your house and find something less expensive.
No...I will not break even. However, it will afford us more room until we make a move and help sell our home. We live in a growing area with a lot of new construction to compete with.

mtnbikes

  • 5 O'Clock Shadow
  • *
  • Posts: 28
Re: Case Study-Am I Crazy!
« Reply #11 on: March 24, 2015, 11:13:52 AM »
What's the math in your area on selling the house now, just renovated, and renting until you move? Gives you more flexibility on the move.

If you aren;t getting rid of the RV then sell the house and live in that!!
We thought of living in the RV for a year after we move and take our time in finding a place to live. Not sure this is possible in CO...maybe the front range.

mtnbikes

  • 5 O'Clock Shadow
  • *
  • Posts: 28
Re: Case Study-Am I Crazy!
« Reply #12 on: March 24, 2015, 12:01:10 PM »
What are all these categories?

Cash         $50
Clothing      $80
Dry Cleaning   $20
Personal      $120
Recreation      $100

Maybe "Dry Cleaning" is required by employment. But $350 in ambiguous flexible categories? And $800 in food? Overall there's probably at least a little room to cut down on these. And I only say that because you do have debt (aka YOUR HAIR IS ON FIRE to the tune of $56,000!!) so you should really limit spending and make use of the all the fun things you have around (aka 3 kids and an amazing basement!)
Think of these categories as an envelope system. We certainly do not spend that each month...all extra at the end of the month goes to debt. Yes...I know my hair is on FIRE...working on putting it out.

Catbert

  • Handlebar Stache
  • *****
  • Posts: 1713
  • Location: Southern California
Re: Case Study-Am I Crazy!
« Reply #13 on: March 24, 2015, 02:16:14 PM »
I would pay off LOC 1st.  Then enough on the CC so that it's paid off by the time the 0% period is up.  Then I would max out whatever retirement vehicles are available (if you aren't already).  Then work on paying off the RV (if you don't sell it).  Finally I'd work on the SLs.

Since you plan on selling in a few years and have such a great loan, I wouldn't pay a dime extra on your mortgage.

Coming from a So Cal perspective both Minnesota and Colorado sound equally too fucking cold.


FrugalSpendthrift

  • Stubble
  • **
  • Posts: 210
Re: Case Study-Am I Crazy!
« Reply #14 on: March 25, 2015, 07:22:35 AM »
3. The basement needed to be finished to accommodate five of us. It will enable us to sell the house at a higher profit in 3 years.

Where do you live that you can even break even on a 33K basement renovation when you sell?  I don't buy this at all.  But it's done, so there is not much you can do about it now.
No...I will not break even. However, it will afford us more room until we make a move and help sell our home. We live in a growing area with a lot of new construction to compete with.
I don't mean to nitpick the details, but if a renovation doesn't break even, then you aren't able to sell the house at a higher profit.  You may sell it at a higher price, but if you spend more on the renovation than you get back on the increase in price, then your profit will decrease.  Putting that aside, renovating the basement is fine if it makes the house better for your family, just be careful about justifying it with fuzzy math.

4. The RV is used frequently...enough where I can write the interest off as a deduction.
I know the RV has other value to you, but it is an easy thing to pick on, because it is discretionary.  The deduction probably pares in comparison to how much was spent on interest, depreciation and fuel.  The value that it adds is purely in the experiences that it provides for your family, just make sure you know how much those experiences are costing and consider if you can entertain the family for less.

rmendpara

  • Pencil Stache
  • ****
  • Posts: 602
Re: Case Study-Am I Crazy!
« Reply #15 on: March 25, 2015, 08:36:41 AM »
Looks like you're saving around 40% of aftertax income on your budget by spending ~5 out of 8.5 income.

Great start!

A few things could obviously have been done better in the past, like the housing costs and RV, but those are lifestyle choices that you have to weigh. If you go on a RV trip once a month, it may make sense to own one, while going 1-2x per yr might make more sense to just rent one each time and avoid all the ownership costs.

Otherwise, it seems a bit could be shaved off some living costs. The biggest controllable area seems to be food costs. Otherwise, on a 5-yr basis, it would make sense to work down your debts (especially those over 5%) to help free up some cash flow to invest more.

Your budget is not horrible (could be improved in a few areas), but the balance sheet needs work. Lots of debt.

Outside of debts, it looks like your living budget is roughly ~30k, maybe 35k if you add a vacation and a trip to visit family or whatever else. That's fantastic! Seems your pension should cover most of that in the future. 30k today will be ~ 54k in 20 years (assuming 3% inflation 1.03^20 * 30 = 54).

Keep working down those debts, add to your investments, stay frugal overall, and I see no reason why you can't go part time or maybe even retire a bit early.

yandz

  • Stubble
  • **
  • Posts: 122
Re: Case Study-Am I Crazy!
« Reply #16 on: March 25, 2015, 08:56:14 AM »
When you say debt snowball, are you using it in the traditional "pay the smallest balance first"?  You should definitely be going highest interest rate first. 7% on 20k is pretty brutal...

fartface

  • Bristles
  • ***
  • Posts: 402
  • Age: 45
  • Location: Wisconsin
    • money apple
Re: Case Study-Am I Crazy!
« Reply #17 on: March 25, 2015, 09:12:49 AM »
I quickly added up your numbers and have your overall net worth somewhere around $275,000 give or take. I didn't count your vehicles in these calculations as I consider them liabilities - not assets.

That being said, my husband and I are similar to you and DW in that we're ages 41 and 45 and also have three children.

Our combined net worth sits around $780K and we earn far less than you (DH FIRE'd 2 years ago at age 43 - but started a little micro-business which brings in about 20K/year). Combined, we now earn about 100K/year.

I plan on working at least 7 to 9 more years.

The way I see it, your wife won't be able to FIRE until your net worth is somewhere around 500K w/a paid off mortgage. That's my 2 cents anyway.  You guys both make VERY good incomes and you should try to maximize these peak earning years as much as possible. If you can sell some shit and downsize, you'll probably be about 5 years out from FIRE (one of you anyway). Good luck!

horsepoor

  • Magnum Stache
  • ******
  • Posts: 3165
  • Location: At the Barn
  • Horses: for sanity & poverty!
Re: Case Study-Am I Crazy!
« Reply #18 on: March 25, 2015, 09:27:17 AM »
While I am new to the MMM lifestyle and the forum itself, I will share what I see:

RV: Do you have time right now for long RV trips? Can you rent an RV for the few trips you take before you move? Seems like this could be a depreciating asset, and the interest is working against you. You can always buy another one after your lifestyle change.

Cars: $28k car? First off, you didn't list a car loan, so good job there. I would sell this, buy something reasonable but reliable, and put the difference towards the line of credit. From my (new) perspective, $28k is half of a condo--not 1 automobile. This should also reduce your monthly transportation expense--which I assume includes a pretty pricey insurance premium on that car.

Savings: Since you clearly have credit cards and a line of credit, I would put this towards the two remaining debts--that represents a 4.25% return on this money. If some "emergency" pops up, you put it on the card, then pay it right off the next time you get paid.

If you make these changes, you can have your debt paid off in less than 2 years. These should be super easy changes that don't really affect your lifestyle.  Other than that, keep reading the blog. Read every post since the beginning of time. By the time you are done, you may be in the position to sell your house, make the move, and be comfortable buying slightly less house that you can get almost entirely for the equity in your current house. At that point think of how far just your one paycheck will go (no debt, not even a mortgage), and soon you can join your family in retirement, or just scale back the job immediately (police reserves?) so you can enjoy your kids growing up.

I like this advice.  Sell this, buy an $8K car and use the cash to kill off your highest interest debt.  Sell the RV yesterday, that thing is sitting there depreciating - AKA hemorrhaging money.  Now you you can direct more to your debt snowball.  You can get a different, cheaper RV after you move if you do without for awhile and decide you really miss it.  Wait until you can pay cash.

neo von retorch

  • Magnum Stache
  • ******
  • Posts: 3358
  • Location: SE PA
    • Fi@retorch - personal finance tracking
Re: Case Study-Am I Crazy!
« Reply #19 on: March 25, 2015, 10:52:59 AM »
Since I had just created a debt waterfall spreadsheet for another forum question the other day, I went ahead and plugged in your numbers (along with some guesses for minimum payments.) It shows the following payoff dates:
  • Line of credit: 9/1/2015
  • RV: 2/1/2016
  • Credit Card: 4/1/2016
  • Student Loan: 2/1/2017

Right around TWO years. Not sure what's different compared to your numbers that got you to three years?

mtnbikes

  • 5 O'Clock Shadow
  • *
  • Posts: 28
Re: Case Study-Am I Crazy!
« Reply #20 on: March 25, 2015, 11:30:45 AM »
When you say debt snowball, are you using it in the traditional "pay the smallest balance first"?  You should definitely be going highest interest rate first. 7% on 20k is pretty brutal...
Definitely going with the highest interest debt first. 

mtnbikes

  • 5 O'Clock Shadow
  • *
  • Posts: 28
Re: Case Study-Am I Crazy!
« Reply #21 on: March 25, 2015, 11:37:00 AM »
While I am new to the MMM lifestyle and the forum itself, I will share what I see:

RV: Do you have time right now for long RV trips? Can you rent an RV for the few trips you take before you move? Seems like this could be a depreciating asset, and the interest is working against you. You can always buy another one after your lifestyle change.

Cars: $28k car? First off, you didn't list a car loan, so good job there. I would sell this, buy something reasonable but reliable, and put the difference towards the line of credit. From my (new) perspective, $28k is half of a condo--not 1 automobile. This should also reduce your monthly transportation expense--which I assume includes a pretty pricey insurance premium on that car.

Savings: Since you clearly have credit cards and a line of credit, I would put this towards the two remaining debts--that represents a 4.25% return on this money. If some "emergency" pops up, you put it on the card, then pay it right off the next time you get paid.

If you make these changes, you can have your debt paid off in less than 2 years. These should be super easy changes that don't really affect your lifestyle.  Other than that, keep reading the blog. Read every post since the beginning of time. By the time you are done, you may be in the position to sell your house, make the move, and be comfortable buying slightly less house that you can get almost entirely for the equity in your current house. At that point think of how far just your one paycheck will go (no debt, not even a mortgage), and soon you can join your family in retirement, or just scale back the job immediately (police reserves?) so you can enjoy your kids growing up.

I like this advice.  Sell this, buy an $8K car and use the cash to kill off your highest interest debt.  Sell the RV yesterday, that thing is sitting there depreciating - AKA hemorrhaging money.  Now you you can direct more to your debt snowball.  You can get a different, cheaper RV after you move if you do without for awhile and decide you really miss it.  Wait until you can pay cash.
Yes...I agree. I feel like selling everything and starting over.

mtnbikes

  • 5 O'Clock Shadow
  • *
  • Posts: 28
Re: Case Study-Am I Crazy!
« Reply #22 on: March 25, 2015, 11:47:41 AM »
Since I had just created a debt waterfall spreadsheet for another forum question the other day, I went ahead and plugged in your numbers (along with some guesses for minimum payments.) It shows the following payoff dates:
  • Line of credit: 9/1/2015
  • RV: 2/1/2016
  • Credit Card: 4/1/2016
  • Student Loan: 2/1/2017

Right around TWO years. Not sure what's different compared to your numbers that got you to three years?
That's funny...I did the same spreadsheet last night and our time frames are almost the same. Thank you for taking the time to do this. However, when looking at the numbers, all the money going towards the debt, and the time frame to pay it all off really makes me SICK!!! Like I told another member I wish I could sell it all and start over and create the freedom and happiness I desire for myself and my family. The bottom line is we really desire to move to a more temperate climate to enjoy the outdoor activities that make us happy and for my DW to retire. I know this will not happen overnight...I just don't want to make another stupid financial decision.

neo von retorch

  • Magnum Stache
  • ******
  • Posts: 3358
  • Location: SE PA
    • Fi@retorch - personal finance tracking
Re: Case Study-Am I Crazy!
« Reply #23 on: March 25, 2015, 12:04:34 PM »
That's funny...I did the same spreadsheet last night and our time frames are almost the same. Thank you for taking the time to do this. However, when looking at the numbers, all the money going towards the debt, and the time frame to pay it all off really makes me SICK!!! Like I told another member I wish I could sell it all and start over and create the freedom and happiness I desire for myself and my family. The bottom line is we really desire to move to a more temperate climate to enjoy the outdoor activities that make us happy and for my DW to retire. I know this will not happen overnight...I just don't want to make another stupid financial decision.

It does no good to mourn the past decisions! If I look back 8 years, my net worth is about $200k lower. I was actually in a "reasonably" good spot there... some lingering debts but I had recovered mostly from car loans that were proportionally too high for my income and well over $10k in credit card debt. I don't even really remember how I felt back then, but being able to look back now is... nice. I agree with others that say the RV is probably not worth holding on to right now. Zap that debt, pay off your basement, and when you sell your house to move to that climate, you'll be in good shape!

yandz

  • Stubble
  • **
  • Posts: 122
Re: Case Study-Am I Crazy!
« Reply #24 on: March 25, 2015, 02:45:55 PM »
Yes...I agree. I feel like selling everything and starting over.

Go with this feeling. I mean, not the house right this minute, but Oh.My.Word. I can vicariously feel the current pressure and near relief.  You have such a clear and deeply desired goal of moving to CO - if you sell the RV and downgrade the 28k car, you could be down to JUST the student loan in no time.  And all the freed up cash flow....you are so close.  Your timeframe for "going without" will be so condensed and by the time you are free, you can move and may find you don't need that RV after all because you living in some fabulous climate, you know?  Doooo iiiiit.
« Last Edit: March 25, 2015, 02:47:31 PM by yandz »

mtnbikes

  • 5 O'Clock Shadow
  • *
  • Posts: 28
Re: Case Study-Am I Crazy!
« Reply #25 on: March 27, 2015, 02:38:59 PM »
That's funny...I did the same spreadsheet last night and our time frames are almost the same. Thank you for taking the time to do this. However, when looking at the numbers, all the money going towards the debt, and the time frame to pay it all off really makes me SICK!!! Like I told another member I wish I could sell it all and start over and create the freedom and happiness I desire for myself and my family. The bottom line is we really desire to move to a more temperate climate to enjoy the outdoor activities that make us happy and for my DW to retire. I know this will not happen overnight...I just don't want to make another stupid financial decision.


It does no good to mourn the past decisions! If I look back 8 years, my net worth is about $200k lower. I was actually in a "reasonably" good spot there... some lingering debts but I had recovered mostly from car loans that were proportionally too high for my income and well over $10k in credit card debt. I don't even really remember how I felt back then, but being able to look back now is... nice. I agree with others that say the RV is probably not worth holding on to right now. Zap that debt, pay off your basement, and when you sell your house to move to that climate, you'll be in good shape!

Thanks for your advice and honesty neogodless!

mtnbikes

  • 5 O'Clock Shadow
  • *
  • Posts: 28
Re: Case Study-Am I Crazy!
« Reply #26 on: March 27, 2015, 02:43:23 PM »
Yes...I agree. I feel like selling everything and starting over.

Go with this feeling. I mean, not the house right this minute, but Oh.My.Word. I can vicariously feel the current pressure and near relief.  You have such a clear and deeply desired goal of moving to CO - if you sell the RV and downgrade the 28k car, you could be down to JUST the student loan in no time.  And all the freed up cash flow....you are so close.  Your timeframe for "going without" will be so condensed and by the time you are free, you can move and may find you don't need that RV after all because you living in some fabulous climate, you know?  Doooo iiiiit.

I have to say yandz...your statement "Dooo iiiiit" was the tipping point for me. The RV is for sale on CL and I already have two people coming to look at it this weekend. Making our dream a reality is too important to let material things and debt stand in our way. Thanks for the encouragement and advice!

mtnbikes

  • 5 O'Clock Shadow
  • *
  • Posts: 28
Re: Case Study-Am I Crazy!
« Reply #27 on: March 28, 2015, 01:03:50 PM »
Quick update...just sold the RV!!! That's $23,000 worth of debt gone. Thanks everyone for the advice and encouragement.

NinetyFour

  • Walrus Stache
  • *******
  • Posts: 6558
  • Location: Southwestern US
Re: Case Study-Am I Crazy!
« Reply #28 on: March 28, 2015, 01:15:19 PM »
Awesome!!

apricity

  • 5 O'Clock Shadow
  • *
  • Posts: 95
Re: Case Study-Am I Crazy!
« Reply #29 on: March 28, 2015, 02:40:11 PM »
Quick update...just sold the RV!!! That's $23,000 worth of debt gone. Thanks everyone for the advice and encouragement.

Yesssss! Way to go :)

Bracken_Joy

  • Walrus Stache
  • *******
  • Posts: 8897
  • Location: Oregon
Re: Case Study-Am I Crazy!
« Reply #30 on: March 28, 2015, 02:47:12 PM »
Quick update...just sold the RV!!! That's $23,000 worth of debt gone. Thanks everyone for the advice and encouragement.

I LOVE THIS! I feel like so often with case studies we never get updates and see changes. Way to talk it over, decide, and then DO! Inspiring to me, seriously!

horsepoor

  • Magnum Stache
  • ******
  • Posts: 3165
  • Location: At the Barn
  • Horses: for sanity & poverty!
Re: Case Study-Am I Crazy!
« Reply #31 on: March 28, 2015, 03:12:14 PM »
Quick update...just sold the RV!!! That's $23,000 worth of debt gone. Thanks everyone for the advice and encouragement.

That is awesome, and fast work.  Bet it feels great!

Bob W

  • Magnum Stache
  • ******
  • Posts: 2947
  • Age: 60
  • Location: Missouri
  • Live on minimum wage, earn on maximum
Re: Case Study-Am I Crazy!
« Reply #32 on: March 28, 2015, 08:18:12 PM »
I used to sell RVs.   Here is the break down.  Max nights used per year 20. ( most people less than 10).          So a 23 k rv expenses work like this.  >.  Taxes 400,   depreciation 2300,  maintain 400,  storage 600,  extra gas 500, interest 2000,  space rent when parking (some call it camping?) 600.  Total = 6,900.  I wonder if you could rent a place to stay for $350 a night?    I can only think of two places where an RV is a decent camping choice in CO.          So in Estes Park I know some great places for 250 a night.  Vail can be had for 190 in summer.   Best camping in co is on the rivers or hike ins.                Sell the RV this spring.   If you can.  It will only sell well below book.   

mtnbikes

  • 5 O'Clock Shadow
  • *
  • Posts: 28
Re: Case Study-Am I Crazy!
« Reply #33 on: March 28, 2015, 11:15:47 PM »
I used to sell RVs.   Here is the break down.  Max nights used per year 20. ( most people less than 10).          So a 23 k rv expenses work like this.  >.  Taxes 400,   depreciation 2300,  maintain 400,  storage 600,  extra gas 500, interest 2000,  space rent when parking (some call it camping?) 600.  Total = 6,900.  I wonder if you could rent a place to stay for $350 a night?    I can only think of two places where an RV is a decent camping choice in CO.          So in Estes Park I know some great places for 250 a night.  Vail can be had for 190 in summer.   Best camping in co is on the rivers or hike ins.                Sell the RV this spring.   If you can.  It will only sell well below book.

Thanks Bob! You probably missed my update...I just sold the RV and eliminated $23,000 from my debt.

Mrkineticz

  • 5 O'Clock Shadow
  • *
  • Posts: 77
Re: Case Study-Am I Crazy!
« Reply #34 on: March 29, 2015, 12:36:35 AM »
Keep on trucking mtnbikes. Great decision on selling the RV. Im 32 and i wish i found this website much earlier. I was up 30k in debt myself and took me 6 years to pay that off.. now I dont have debt and I want to try and keep it that way. You make lots of money and people in their 40's still have plenty of time to save for retirement.

grundomatic

  • 5 O'Clock Shadow
  • *
  • Posts: 49
Re: Case Study-Am I Crazy!
« Reply #35 on: March 30, 2015, 10:43:29 PM »
Hell yes! I just got goosebumps reading the updates! I am honored to have contributed maybe even just a little bit to someone making a move towards a life they want to live. You are so close, just keep learning and changing your mindset and you will literally be there in no time. I am so happy for you!

Now to keep you on track--where are you with the car?

mtnbikes

  • 5 O'Clock Shadow
  • *
  • Posts: 28
Re: Case Study-Am I Crazy!
« Reply #36 on: March 30, 2015, 11:19:39 PM »
Hell yes! I just got goosebumps reading the updates! I am honored to have contributed maybe even just a little bit to someone making a move towards a life they want to live. You are so close, just keep learning and changing your mindset and you will literally be there in no time. I am so happy for you!

Now to keep you on track--where are you with the car?

Yes!! Thanks to you guys I got rid of $23,000 of debt in less than a week. Now I need advice on the vehicle situation. See my next post on this thread.

mtnbikes

  • 5 O'Clock Shadow
  • *
  • Posts: 28
Re: Case Study-Am I Crazy!
« Reply #37 on: March 30, 2015, 11:39:11 PM »
Now on to phase 2 of this journey. I will post my original case study with some number updates. Keep in mind I just sold the $23,000 RV and have that debt gone.

Brief introduction: My wife (DW) and I (DH) would like to make a change in three years in order to spend more quality time with family, simplify our life, enjoy our hobbies more often, and escape the climate here in Minnesota. We also have three children ages 8, 6, and 2. We are leaning towards Colorado since I used to live there and find the climate conducive to our desired lifestyle. In addition, we have friends living there that could help us with the process of relocating. Our goal is for DW to retire in three years and DH would work full time in current profession.
 
Professions:
DH(44): A part time (0.8) RN at a major hospital.
DW(42): A full time police sergeant in a major city.

Income & Benefits (monthly)
Combined gross income: $11,700 (will increase, 2 raises in June)
Combined net income: $8700
The difference is from health ins, deferred comp, pension, and taxes.

Assets:
House      $305,000
Vehicle 1      $28,000
Vehicle 2      $9,000
Savings      $9000
MNDCP(Fidelity)   $127,000
WROS (Fidelity)   $88,000
SEP(Fidelity)   $33,400
Roth(Fidelity)   $3,600
tIRA(Fidelity)   $5,600
403b(Fidelity)   $515

Liabilities:
House      $179,700 (3.62% refi last fall to 15 yr loan)
Student Loan   $52,000 (4.25%)
Line of Credit   $20,000 (7%) Just finished basement project
Credit Card   $13,000 (0%) Just finished basement project

Budgeted Expenses (monthly)
Cash         $50
Clothing      $80
Dry Cleaning   $20
Food         $800
Housing      $150
Medical      $40
Personal      $120
Recreation      $100
Transportation   $625
Utilities      $355
Liabilities      $2,688
TOTAL      $5,028   

*All extra cash per month goes to debt snowball. We are on schedule to have all debt, except mortgage, to be paid off in less than two years.

Future Pensions
DW: $4,000-$4,500 monthly (starting at age 50)
DH: $1,200-1,500 monthly

Ok...l now need advice on the vehicles, especially mine. Keep in mind both vehicles are PAID OFF.
DH: 2011 Ford F150...48,000 miles (used it to pull RV I just sold and I haul 4 mountain bikes plus chariot to pull baby in).
DW: 2006 Toyota Sienna...156,000 miles

Keep in mind there are five of us and I haul mountain bikes and a baby chariot.
My question is do I sell the truck and buy a less expensive car and put the extra money towards the remaining debt or just keep it until it dies?
If I sell it what do you recommend? I need a vehicle big enough to accommodate the family and our mountain bikes.
I have looked at the Mazda CX5 but I'm afraid it is too small.
Any advice would be appreciated!


UnleashHell

  • Walrus Stache
  • *******
  • Posts: 6543
  • Age: 52
  • Location: Florida
  • Chapter IV - A New ... er.. something
Re: Case Study-Am I Crazy!
« Reply #38 on: March 31, 2015, 05:14:49 AM »
nice work with the RV - that's a situation you can look at again in the future and see if it fits in with your plans.

the cars - yeah - you do not need a 150. with five and bikes then I think a minivan is the answer - and I've just been looking at them!! We currently have a town and country. as with my last dodge POS its hit 95,000 and has started to fail. I hate dodge. Avoid them at all costs.
I just looked at the madza and came to the same conclusion as you - not a chance it'll work.

you need a reliable van that you can add a hitch and bike carrier to.
I'm down to the following vehicles
Odessey
sienna
Entourage/Sedona
Merc R350

the odessey and sienna seem the best choices but they go forever and hold the resale value - you may need to look and look and look to find a good priced one. however you could get a newer one instead of the 150 and then trade the current van for a far cheaper used car.

The entourage is a rebadged Sedona - find one in good shape and you are in business.

The merc is interesting - they have dropped price since new - may work for your scenario but the upkeep may be pricey. plus its a 5l engine - not the most fuel efficient ever... again - if you find a good cheap one then its worth looking at.

you could end up with a 5k used car, a 15k van and selling 37k of current cars.  you might free up 17k and get rid of most of the LoC.

worth thinking about.


in case its not clear I would NOT recommend dodge/chysler vans.

grundomatic

  • 5 O'Clock Shadow
  • *
  • Posts: 49
Re: Case Study-Am I Crazy!
« Reply #39 on: March 31, 2015, 06:37:33 AM »
Do you both haul 5 people around plus the bikes at the same time? Seems to me like you already own the perfect vehicle for that--the Sienna. Just get a roof rack or a hitch rack for the bikes and camping gear. The second car should be more suitable for what it does all the time (get you to work?), plus be able to haul the family and bikes in a pinch. Maybe a Toyota matrix, again with a roof rack or hitch rack.

horsepoor

  • Magnum Stache
  • ******
  • Posts: 3165
  • Location: At the Barn
  • Horses: for sanity & poverty!
Re: Case Study-Am I Crazy!
« Reply #40 on: March 31, 2015, 07:29:30 AM »
How much do you drive the truck?  It seems like a wagon with a roof rack would work well for you.  How about a Subaru Forester?  You could probably get a good used one for like $12K (guessing), and it would be good for mountain activities once you move to CO.  The more miles you currently put on the truck, the more it makes sense to downgrade to something more economical for the long-run savings, not just the cash from selling the truck.

yandz

  • Stubble
  • **
  • Posts: 122
Re: Case Study-Am I Crazy!
« Reply #41 on: March 31, 2015, 09:34:20 AM »
Yes...I agree. I feel like selling everything and starting over.

Go with this feeling. I mean, not the house right this minute, but Oh.My.Word. I can vicariously feel the current pressure and near relief.  You have such a clear and deeply desired goal of moving to CO - if you sell the RV and downgrade the 28k car, you could be down to JUST the student loan in no time.  And all the freed up cash flow....you are so close.  Your timeframe for "going without" will be so condensed and by the time you are free, you can move and may find you don't need that RV after all because you living in some fabulous climate, you know?  Doooo iiiiit.

I have to say yandz...your statement "Dooo iiiiit" was the tipping point for me. The RV is for sale on CL and I already have two people coming to look at it this weekend. Making our dream a reality is too important to let material things and debt stand in our way. Thanks for the encouragement and advice!

Just saw this....so excited for you!!  Congrats on your first big move.  Can't wait to see how quickly you end up where you want to be!!

mtnbikes

  • 5 O'Clock Shadow
  • *
  • Posts: 28
Re: Case Study-Am I Crazy!
« Reply #42 on: March 31, 2015, 11:23:17 AM »
Another update: Having our realtor friend stop by today to give us an idea what we could realistically get for our house after finishing the basement. Will repost when I get new numbers.

mtnbikes

  • 5 O'Clock Shadow
  • *
  • Posts: 28
Re: Case Study-Am I Crazy!
« Reply #43 on: March 31, 2015, 11:25:12 AM »
nice work with the RV - that's a situation you can look at again in the future and see if it fits in with your plans.

the cars - yeah - you do not need a 150. with five and bikes then I think a minivan is the answer - and I've just been looking at them!! We currently have a town and country. as with my last dodge POS its hit 95,000 and has started to fail. I hate dodge. Avoid them at all costs.
I just looked at the madza and came to the same conclusion as you - not a chance it'll work.

you need a reliable van that you can add a hitch and bike carrier to.
I'm down to the following vehicles
Odessey
sienna
Entourage/Sedona
Merc R350

the odessey and sienna seem the best choices but they go forever and hold the resale value - you may need to look and look and look to find a good priced one. however you could get a newer one instead of the 150 and then trade the current van for a far cheaper used car.

The entourage is a rebadged Sedona - find one in good shape and you are in business.

The merc is interesting - they have dropped price since new - may work for your scenario but the upkeep may be pricey. plus its a 5l engine - not the most fuel efficient ever... again - if you find a good cheap one then its worth looking at.

you could end up with a 5k used car, a 15k van and selling 37k of current cars.  you might free up 17k and get rid of most of the LoC.

worth thinking about.


in case its not clear I would NOT recommend dodge/chysler vans.

Yes...we have friends with a Dodge minivan and is literally falling apart and is newer than our Sienna with the same number of miles.

mtnbikes

  • 5 O'Clock Shadow
  • *
  • Posts: 28
Re: Case Study-Am I Crazy!
« Reply #44 on: March 31, 2015, 11:28:19 AM »
How much do you drive the truck?  It seems like a wagon with a roof rack would work well for you.  How about a Subaru Forester?  You could probably get a good used one for like $12K (guessing), and it would be good for mountain activities once you move to CO.  The more miles you currently put on the truck, the more it makes sense to downgrade to something more economical for the long-run savings, not just the cash from selling the truck.

I agree. The ironic thing is I used to own a Forester...funny you mention that. I just need to keep looking...so many of the used vehicles have been in accidents. I really don't want to deal with a vehicle with problems down the road.